Jane Tabiner, Executive Director of Asset financing solutions (SAF), explores how the next 12 months will be a pivotal time for modular construction suppliers as demand for MMC projects increases in the public sector
The pandemic has had an unprecedented impact on UK utilities, which face new and continuing challenges as they attempt to tackle the ramifications of the past year.
The public sector is faced with an increasing demand for services, such as routine operations, mental health support and increased classroom space. However, it has been widely suggested that the Chancellor will spend £ 16bn less on public services this year, meaning limited budgets are extremely likely.
Healthcare is an industry struggling with capacity, where the needs of the public are predicted to increase dramatically in 2021 and beyond. NHS wait times hit an all-time high in January, with nearly five million people waiting to start treatment, so scaling up facilities is critical to meet that demand. In addition, it is vital to do so in a fast and cost effective manner, and this is where financial solutions for offsite construction projects can play a vital role.
Why choose off-site construction?
Limitations associated with traditional construction, such as project duration due to adverse weather conditions or supplier delays, have meant that this approach has not always been able to deliver the increased yields required to meet demand. . In response, we have seen an increase in Modern Construction Methods (MMCs), such as offsite, in the public sector.
Offsite construction offers many benefits to public and private sector companies, providing a fast and cost effective way to build new desirable facilities that will serve communities. It requires limited time on site for installation, which means minimal disruption. The off-site construction method is also more sustainable and environmentally friendly, which is why it continues to gain popularity.
With a large backlog of work in many utilities, such as routine bathroom procedures in hospitals, now is the time to invest in new facilities. Going forward, public sector organizations should consider engaging with offsite or modular construction suppliers to find incremental solutions to their current capacity issues.
Access capital to finance projects
For the above to be feasible, both modular building suppliers and public sector organizations must be able to access the funds necessary to finance the creation of these new facilities. It’s no secret that budgets are tight, and the Chancellor has made it clear that reducing the country’s deficit will be an ongoing priority. Therefore, other financial solutions must be made available to ensure that we can continue to provide the support people need.
Flexible finance providers can work with offsite or modular construction providers and public sector organizations to establish a finance solution that will provide the funds needed to finance critical offsite projects. Plus, they can ensure funds are available within days, allowing the modular vendor to start working as soon as possible.
This is where private companies, like SAF, can bring real added value. Appropriately structured financing solutions along with all the necessary legal documentation, allowing public sector organizations to immediately make the necessary upgrades, additions and extensions to their infrastructure and equipment, without the need for an initial investment.
Collaboration will accelerate innovation
Private finance companies understand that raising capital has been an ongoing problem for the public sector, especially in the construction landscape, as there are often more urgent and urgent ways to spend tight budgets. This is what makes flexible and creative private business financing solutions so valuable and an attractive option to have on the table.
For example, when decisions on new projects are delayed due to cash flow or budget issues, the option of a creative financial solution could prevent this and promote the efficient delivery of new innovative projects without delays or problems. Budgets are agreed upon upfront when using a private finance company and a structured repayment method is developed so that new facilities can be funded, built, and ready for use in just a matter of weeks.
Privately funded solutions are provided by experienced and fully compliant experts, with a solid understanding of bespoke procurement procedures. More education and awareness is needed regarding the opportunities for collaboration between the public and private sectors, especially with regard to construction works. Financial support from private companies will help tackle the capacity crisis, allowing our utilities to continue to do fundamental work.
Planning for the future
It is more important than ever for public sector bodies to have access to funds and resources – this is the only way to ensure that major UK public services can resume serving our people in the event of a need, and in high quality environments.
Public sector funding is imperative, but it is increasingly unlikely that there will be enough funds available to provide organizations across the country with the funding needed to meet demand.
As an industry, we have an important role to play in bridging the dots and ensuring that public sector bodies and modular building suppliers can turn to financial experts for funding. Through this collaboration, we are facilitating much-needed investments in our public services at a critical time for our country.